A long pondered but only lately realized blog about economics, politics, evaluation, econometrics, academia, college football and whatever else comes to mind.

Tuesday, September 15, 2009

Health care myths - I

A common theme in the media of late has been the writing of articles that address various health care "myths" or even "lies". Let's look at three of these in separate posts.

The first comes from Newsweek. Helpfully, the article announces its political bias in the first sentence, which implicitly suggests that only the opponents of health care reform tell lies that need to be addressed.

This paragraph is a wonder:

"The general claim that care will be rationed under health-care reform is less a lie and more of a non-disprovable projection (as is Howard Dean's assertion that health-care reform will not lead to rationing, ever). What we can say is that there is de facto rationing under the current system, by both Medicare and private insurance. No plan covers everything, but coverage decisions "are now made in opaque ways by insurance companies," says Dr. Donald Berwick of the Institute for Healthcare Improvement."

So, let's see, we have rationing now under private health insurance and under Medicare, but whether or not there would be rationing if current reform proposals are implemented is just a "projection". Do they have editors at Newsweek? A newsmagazine that wanted to do some good would make clear that the question is not whether there is rationing but how it is set up. Most introductory economics texts have some wording about how the price system allocates scarce resources in a market. Allocate is just a more apt term for rationing. Resources are always scarce, some mechanism has to sort them among individuals (taking note that the mechanism also affects the amount of resources available).

Next we learn that

"[t]he House bill does not use the word `ration.'"

I suppose there could be two reasons for this. One is that there is actually no rationing implicit in the reform. The other is that the politicians who wrote the bill avoided the very naughty word rationing. I wonder, which of these could it be?

Of course, it is great to know that

Nor does [the health care reform bill] call for cost-effectiveness research, much less implementation—the idea that "it isn't cost-effective to give a 90-year-old a hip replacement.

What do we learn from this? To begin, we learn that the Newsweek writer does not know what cost-effectiveness research is, something one might consider odd given that she is writing about it in a major newsmagazine. We also learn that, whatever she thinks it is, she does not like it. That is too bad, because the lack of a serious cost-effectiveness component is a major flaw of the bill - not a feature, but a bug. A serious writer and a serious magazine would explain to its readers what cost-effectiveness research is, why it is a good thing, and why its absence indicates a lack of seriousness about controlling expenditures on the part of the bill's authors.

The article is on point about illegal immigrants and death panels. In particular, the right should be ashamed of itself about the death panel business. Counseling old people that it is okay not to waste a lot of taxpayer dollars on end of life care with little if any health payoff is a good thing, not a bad one. Moreover, it is much nicer to pass on at home in a warm environment with your family and familiar things nearby than in some hospital room with people you do not know.

Finally, we have:

The government will set doctors' wages.This, too, seems to have originated on the Flecksoflife blog on July 19. But while page 127 of the House bill says that physicians who choose to accept patients in the public insurance plan would receive 5 percent more than Medicare pays for a given service, doctors can refuse to accept such patients, and, even if they participate in a public plan, they are not salaried employees of it any more than your doctor today is an employee of, say, Aetna. "Nobody is saying we want the doctors working for the government; that's completely false," says Amitabh Chandra, professor of public policy at Harvard's Kennedy School of Government.

Apparently when government sets reimbursement rates for a large segment of the market it has no effect on wages in the rest of the doctor labor market. Any economist, including my friend Amitabh, whose quote here is unrelated to the point at issue, could have told the author that this is a very silly argument, indeed.

So, what are we left with at the end of the day? The article gets a couple of things right and a lot more things wrong, usually in ways that involve basic knowledge about the policy area under discussion or simple logic. Moreover, the article focuses exclusively on lies from the right and ignores the many lies offered up by proponents of the current reform proposoal. This piece is a D, at best.